The "direct effect" of an increase in the money supply is to
A) increase aggregate demand as people spend their excess money balances.
B) increase aggregate demand as interest rates fall and investment spending increases.
C) increase aggregate supply as producers anticipate higher future profits.
D) decrease the rate of inflation.
Correct Answer:
Verified
Q98: The asset demand for money is
A) greater
Q139: The direct effect of an increase in
Q140: The Fed engages in open market operations
Q141: The short-run effect of an increase in
Q142: The "indirect effect" of an increase in
Q144: Q145: One result of a contractionary monetary policy Q146: Which of the following will NOT occur Q147: The indirect effect of an increase in Q148: ![]()
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